Romania’s new government defers publishing ruling strategy

Romania’s new government, backed by the four pro-Western parties in Parliament holding a majority of 65%, has not published its ruling strategy, while versions of it have leaked to the media, providing a broad image but not very specific details. Notably, the strategy is expected to incorporate the elements outlined in the updated fiscal plan that the European Commission anticipates before the July 8 ECOFIN meeting. Consultations with the EC on the fiscal plan are reportedly held.

According to a version of the ruling strategy published by G4media.ro, the number of employees in the public administration would be reduced by 20%, the payroll envelope for this category of employees would be cut by 20% as well, the profit on dividends would rise to 16% from 10% currently, and the preferential VAT rates would be abolished except for food, energy (firewood included) and medicines – which would be set at 9%.

Other measures, such as a special tax on the “excessive profit of banks” and a 10% tax on capital gains to replace the 1%-3% system currently in place, are also in the strategy.

Minister candidates responding to expert committees and journalists at the Parliament headquarters before their appointment provided limited details on the ruling strategy, to be further confirmed.

Finance minister Alexandru Nazare, asked about the specific budgetary impact of the measures included in the ruling strategy, confirmed that this is still subject to consultations with the experts of the European Commission. Nazare said the new government avoided providing specific details before being agreed upon with the European Commission, according to Economica.net.

The finance minister thus confirmed that the fiscal plan is subject to negotiations with the European Commission representatives such as to make possible a smooth endorsement by ECOFIN on July 8.

Separately, the rating agencies are closely monitoring the process of ruling strategy and fiscal plan drafting. Fitch has scheduled an update on Romania’s sovereign rating in mid-August.

(Photo source: Gov.ro)